Business Energy Contracts UK 2026: Terms, Rates & What to Check Before Signing Quick Answer
A business energy contract sets the price, term and conditions under which your company buys electricity or gas.
Before agreeing to one, check:
unit rate
standing charge
estimated annual cost
contract start and end dates
whether pricing is fixed, variable or flexible
what is and isn’t included in the quoted price
termination and switching terms
what happens when the contract ends
broker or intermediary commission where applicable
any additional fees or special clauses
Don’t choose a business energy contract using the unit rate alone.
Compare the expected annual cost using the same consumption figures, then compare the contract terms and risk.
Compare business energy contracts & quotes →
Key Takeaways
Business energy contracts work differently from domestic energy agreements.
There is no single best contract type for every business.Fixed pricing provides greater price certainty but doesn’t guarantee the cheapest future price.
Flexible or structured procurement is generally more relevant to larger energy users.
Check the total expected annual cost , not just the headline p/kWh rate.
Understand exactly what happens when your contract expires.
Business energy contracts can be legally binding without the domestic-style cooling-off period many buyers expect.
Broker commission and fees should be considered as part of the overall contract cost.
Microbusinesses and small businesses have additional protections in parts of the non-domestic energy market.
Set a contract-end reminder well before expiry so you have time to review the market.
Contents
How Do We Work?
Our comparisons are researched and reviewed by the Compare Your Business Costs editorial team using provider information, official UK guidance and business buying criteria. See how Compare Your Business Costs works.
Authored by: Ally Cox – Business Technology & B2B Services Specialist, 10+ years’ experience.
Last updated: September 2026
What Is a Business Energy Contract? A business energy contract is an agreement between a business and an energy supplier covering the supply of electricity or gas to commercial premises and it can specify:
how energy is priced
unit rates
standing charges
contract duration
payment terms
termination rights
renewal arrangements
additional fees or charges
broker or intermediary remuneration where applicable
Unlike domestic default tariffs, business energy contracts aren’t generally protected by the domestic energy price cap.
Commercial pricing is instead based on the individual supply, market conditions and contract being offered.
For current price benchmarks, see our Business Energy Prices UK guide.
Types of Business Energy Contract Business energy contracts can take several forms.
Contract Type How It Works Main Consideration
Fixed
Agreed pricing is fixed according to the contract terms
Greater price certainty
Variable
Rates can change according to the contract terms
Greater exposure to price changes
Flexible/structured
Energy can be purchased in portions rather than fixing the entire requirement at once
More active procurement and risk management
Deemed
Can apply when energy is consumed without an expressly agreed contract
Often intended as an interim arrangement
Out-of-contract
Can apply after an existing contract ends according to its terms
Check pricing and replacement options promptly
Rollover/evergreen
Contract continues or renews according to agreed terms
Understand renewal and termination provisions
Fixed Business Energy Contracts
A fixed contract provides an agreed pricing structure for a defined contract period.
Its main advantage is price certainty .
If relevant market costs subsequently rise, the contracted pricing can provide protection from some of that movement, subject to exactly what the contract fixes.
But fixed doesn’t mean:
your total bill never changes
every component is necessarily fixed
the contract will prove cheaper than future market prices
Your total bill can still change if consumption changes.
Who Might Prefer Fixed Pricing?
Businesses that prioritise:
budget certainty
simpler forecasting
less exposure to market-price movements
less active energy procurement
could prefer fixed pricing.
Fixed pricing is primarily a risk-management decision, not a prediction that today’s market price is the lowest it will ever be.
See Fixed vs Variable Business Energy .
Variable Business Energy Contracts Variable contracts allow rates to change in accordance with the contract terms, which means a business can have more exposure to changes in energy costs.
If relevant costs fall, variable pricing may fall.
If they rise, the business may pay more.
Is Variable Energy Cheaper?
Not necessarily – v ariable pricing shouldn’t be presented as an automatic way to “benefit from market dips”.
The commercial question is whether the additional price exposure and contract terms suit your business.
A company with a high need for predictable expenditure may value certainty differently from one prepared to accept greater price movement.
Flexible & Structured Business Energy Contracts Flexible procurement is different from a simple variable tariff.
It can allow businesses to purchase portions of their expected energy requirement at different times rather than fixing the entire volume at once.
This is generally more relevant to larger businesses with substantial energy consumption and p otential benefits include:
spreading procurement decisions across different periods
greater control over energy-buying strategy
managing exposure to market movements
But it also requires more active management and carries market risk.
Flexible procurement doesn’t guarantee a lower price than fixing.
See our Business Energy Procurement Services guide.
How Long Are Business Energy Contracts? There isn’t one correct business energy contract length and the available term depends on factors including:
supplier
contract type
business size
consumption
market conditions
credit assessment
individual quotation
Shorter Contract
A shorter contract can mean returning to the market sooner.
That could be beneficial if prices subsequently fall, but it can also expose the business to higher renewal prices if they rise.
Longer Contract
A longer fixed contract can provide greater pricing visibility over a longer period, but it also means committing for longer.
A longer contract is not automatically a cheaper contract.
Compare the available terms and decide how much price certainty and flexibility your business actually needs.
How to Compare Business Energy Contracts Don’t compare quotations using one number.
Use the same annual consumption assumptions for every quote and compare:
Check Why It Matters
Unit rate
Determines the consumption-related energy charge
Standing charge
Fixed daily cost can materially affect annual spend
Estimated annual cost
Provides a more useful overall comparison
Contract length
Determines how long you are committing
Fixed/variable structure
Determines your exposure to price changes
Included charges
Helps establish whether quotes are genuinely comparable
Exit/termination terms
Determines your ability and cost to leave early
End-of-contract terms
Determines what happens if you take no action
Broker remuneration
Forms part of the commercial cost where an intermediary is used
Use the Same Consumption for Every Quote
If Supplier A is quoting against 80,000 kWh and Supplier B is quoting against 100,000 kWh, comparing their estimated annual costs isn’t meaningful.
Use your actual annual consumption where possible.
How to Calculate the Cost of a Business Energy Contract
Business Energy Bill Calculator UK Estimate your monthly and annual business electricity and gas costs using your kWh usage, unit rates, standing charges and VAT.
Business type
Office Retail shop Restaurant Café / coffee shop Pub / bar Salon / clinic Warehouse / industrial Hotel / guesthouse Manufacturing / high usage Used to provide a recommendation after the calculation.
Contract status
Fixed contract Contract ending soon Out of contract / deemed rate Not sure Out-of-contract rates can be much more expensive.
VAT rate
0% 5% 20% Most businesses should check their VAT treatment with their supplier or accountant.
Months until contract ends
Already ended / out of contract 1 month 3 months 6 months 12+ months Businesses often compare quotes before renewal.
Need renewable / green energy?
No Yes Green tariffs may affect supplier choice and pricing.
Your estimated business energy bill
Monthly electricity cost
£0
Estimated monthly bill
£0
Average effective rate
0p/kWh
Potential monthly saving
£0
Enter your energy usage and rates to estimate your business energy bill.
Recommendation will appear here.
This calculator is an estimate only. Actual business energy bills vary by supplier, meter type, region, contract, usage, VAT treatment, standing charges, Climate Change Levy, pass-through charges and renewal terms.
What Should You Check Before Signing a Business Energy Contract? Ofgem recommends understanding the contract type, duration, fees, protections and any broker fees or commission before agreeing to a business energy contract.
We would check the following.
1. Contract Start & End Dates
Know exactly when the agreement begins and ends.
2. Pricing Structure
Establish whether the price is:
fixed
variable
flexible/structured
partially fixed
Also establish which components are fixed.
3. Unit & Standing Charges
Calculate their combined effect at your expected consumption.
4. Additional Charges
Check for relevant:
metering charges
administration charges
capacity-related charges
payment-related charges
broker/intermediary remuneration
special contract clauses
Not every contract will contain every charge.
5. Termination Terms
Establish:
whether you can terminate early
in what circumstances
whether an exit fee applies
what notice requirements apply
6. End-of-Contract Arrangements
Ask:
“Exactly what happens if we reach the contract end date without agreeing another contract?”
Don’t leave this until the final week.
7. Broker Costs
If a broker arranged the contract, understand how the broker is being paid and the effect on your contract.
8. Authority
If you give a broker a Letter of Authority , understand precisely what it permits them to do.
Business Energy Broker Fees & Commission Businesses can arrange energy contracts:
directly with suppliers
through a comparison service
through an energy broker or consultant
Brokers can charge directly or receive commission through the supplier, and for contracts signed from 1 October 2024, principal contract terms must clearly display broker fees for non-domestic customers, and suppliers must make this information available on request.
Does Using a Broker Guarantee a Cheaper Contract? No. A broker can help with:
market sourcing
quote comparison
negotiation
administration
procurement support
But you should still understand:
which suppliers were approached
whether the comparison covers the whole market or a panel
how the broker is paid
what ongoing service is included
See our Business Energy Brokers UK guide.
What Happens When a Business Energy Contract Ends? This depends on the contract and possible outcomes include:
you agree a new contract with the existing supplier
you switch to another supplier
the contract rolls over according to its terms
you move onto out-of-contract pricing
Out-of-Contract Rates
If your previous agreement specifies what pricing applies after expiry, you may move onto out-of-contract rates – these can differ substantially from your previous contracted pricing.
See our Business Energy Out-of-Contract Rates guide.
Deemed Contracts
A deemed contract is different and it can arise where a business consumes energy without having expressly agreed a contract with the supplier, including in some move-in situations.
See our Deemed Business Energy Rates guide.
Rollover Contracts
Some contracts can renew automatically according to their terms – see our Rollover Business Energy Contracts guide.
These terms shouldn’t be treated as interchangeable.
Can You Leave a Business Energy Contract Early? Sometimes, but it depends on the contract.
Ofgem advises you to check:
when they can switch
what notice is required
whether an exit fee applies
With fixed contracts, many suppliers won’t allow an early switch unless the contract provides for it or an applicable exit fee is paid.
What Is a Switching Window?
A switching window is the period in which you can arrange renewal or tell the supplier you intend to leave in accordance with the contract.
Don’t assume every contract uses the same window.
Check your own terms.
For the complete process, see Business Energy Switching Services .
Are Verbal Business Energy Contracts Binding? They can be.
This is one of the most important differences for businesses to understand – a business energy agreement can be binding even when agreed over the telephone rather than physically signed.
Before Saying Yes on the Phone
Make sure you understand:
supplier
contract length
pricing
standing charge
fees
termination provisions
end-of-contract arrangements
broker commission
Don’t treat a sales call as an informal quotation if the conversation is actually asking you to enter a contract.
Green Business Energy Contracts & REGOs Businesses interested in renewable electricity may encounter tariffs supported by Renewable Energy Guarantees of Origin (REGOs) .
One REGO certificate is issued for each megawatt hour of eligible renewable electricity generated and REGOs are primarily used for Fuel Mix Disclosure and provide transparency about the proportion of electricity suppliers source from renewable generation.
What Should You Ask About a Green Contract?
Don’t stop at the word “green”.
Ask:
what renewable claim is being made?
how is the electricity evidenced?
what does the supplier’s fuel mix show?
are REGOs being used?
does the product involve direct renewable procurement or certificate matching?
does it meet your organisation’s sustainability or reporting requirements?
A REGO is evidence associated with renewable electricity generation; it shouldn’t be interpreted as proof that the physical electrons arriving at your premises came directly from a particular renewable generator.
See our Green Business Energy Suppliers guide.
Microbusiness & Small Business Energy Contract Protections Some protections depend on the size of the business.
Ofgem currently defines a microbusiness using criteria including employee numbers, turnover/balance sheet totals and energy consumption.
A business can qualify through the relevant financial/employee criteria or energy-consumption thresholds.
Microbusiness Contract Protections
Ofgem states that microbusiness suppliers must provide clear contract information and additional protections around areas including certain termination and renewal arrangements.
Small businesses also have additional protections in areas including complaints and broker arrangements.
Don’t assume the rules applying to a microbusiness automatically apply to a larger commercial or industrial energy customer.
If you’re uncertain about your status or rights, check the latest Ofgem guidance.
Our View: Choose the Contract Before You Choose the Supplier A common buying process is “Which supplier is cheapest?”
We think the better starting point is “What contract does this business actually need?”
Establish:
how much energy you use
when the existing contract ends
how much price certainty you need
how much flexibility you need
what contract structures are appropriate
what the available quotations cost in total
what the terms commit you to
Only then does supplier selection become meaningful.
Don’t Try to Perfectly Time the Market
Waiting indefinitely because wholesale prices might fall can create another risk: reaching your contract end date without a replacement arrangement.
You don’t need to predict the exact bottom of the energy market.
You need a contract whose price, risk, term and conditions are commercially acceptable to your business.
Our Preferred Buying Order
Consumption → contract position → risk → quotations → total cost → terms → supplier.
This also keeps this page distinct from our UK Business Energy Market guide, which explains the wider market influencing those quotations.
Business Energy Contract FAQs What is a business energy contract?
A business energy contract is an agreement covering the supply and pricing of gas or electricity for commercial premises. It can set unit rates, standing charges, duration, payment terms, termination provisions and what happens when the contract ends.
What is the best business energy contract?
There isn’t one best contract for every business. The appropriate option depends on consumption, budget requirements, risk tolerance, contract length, market quotations and the terms available.
Should I choose fixed or variable business energy?
Fixed pricing provides greater price certainty. Variable pricing provides greater exposure to price movements. Which is more appropriate depends on your business’s appetite for price risk rather than simply which one might prove cheapest afterwards.
How long should a business energy contract be?
There isn’t a universal ideal term. Compare the terms suppliers are currently offering and consider how long your business wants price certainty versus how soon it may want to return to the market.
Are longer business energy contracts cheaper?
Not necessarily. A longer contract provides a longer commitment and potentially greater price certainty, but shouldn’t automatically be assumed to have a lower rate.
Can I cancel a business energy contract?
Your ability to cancel or terminate depends on the contract. Check the termination provisions, switching window and any applicable exit fee.
Do business energy contracts have a 14-day cooling-off period?
Generally, no. Ofgem warns that business energy agreements don’t have the cooling-off period associated with domestic energy contracts, including where an agreement is made over the telephone.
Can I agree a business energy contract over the phone?
Yes. A business energy contract can be binding when agreed verbally over the telephone, so understand the offer before agreeing to it.
What happens when my business energy contract expires?
It depends on your contract. You may agree another contract, switch supplier, move onto out-of-contract pricing or enter a rollover arrangement according to the terms.
Is a deemed contract the same as an out-of-contract tariff?
No. An out-of-contract arrangement can apply after an existing contract expires according to its terms. A deemed contract can arise where energy is consumed without an expressly agreed contract.
Should I use an energy broker?
A broker can help source, compare and negotiate contracts, but check which suppliers are compared, how the broker is paid and what service is included. See our Business Energy Brokers guide.
What should I compare on a business energy quote?
Compare unit rates, standing charges, estimated annual cost, contract length, pricing structure, additional charges, termination terms, end-of-contract arrangements and intermediary costs where applicable.
Are business energy prices capped?
Business energy customers aren’t protected by Ofgem’s domestic energy price cap. Commercial contracts are individually priced.
Compare Business Energy Contracts Before comparing quotations, have the following ready where possible:
recent energy bill
annual electricity and/or gas consumption
MPAN and/or MPRN current supplier
contract end date
business postcode
Then compare the quotations using the same consumption assumptions .
Compare tailored business energy quotes →
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Contracts & Switching Prices & Procurement Market & Energy Management Hi, I’m Ally Cox , a senior copywriter and blogger at CompareYourBusinessCosts.co.uk, the UK’s trusted platform for comparing business services.over a decade of experience in the B2B sector, I specialise in simplifying complex topics like leased lines, VoIP, business energy, HR and payroll solutions, accounting software, and EPOS systems .HR, copywriting, and business operations- from clocking-in systems to card machines and office technology .informed, confident decisions when choosing products and services that improve efficiency and save money.
